IMF Says Bitcoin Crash Hasnt Harmed Global Financial Stability

[ad_1]

The International Monetary Fund said that the Bitcoin bear market hasn’t had an impact on global financial stability in a Tuesday report.

In its World Economic Outlook Update: Gloomy and More Uncertain report published today, the IMF acknowledged that the crypto market has experienced a dramatic sell-offbut added that it hasnt yet hurt the financial system.

Bitcoins price was today down nearly 5%, trading for $20,811.94, according to CoinMarketCap data. The largest cryptocurrency by market cap is down nearly 70% from its all-time high last November of over $69,000. Virtually every other cryptocurrency is down, too, and hasnt escaped this years sell-off.

As investors face uncertainty with Russias war in Ukraine and supply chain issues among other macroeconomic factors they are shifting risky assets. Bitcoin and digital currencies are deemed riskalong with equities.

Crypto assets have experienced a dramatic sell-off that has led to large losses in crypto investment vehicles and caused the failure of algorithmic stablecoins and crypto hedge funds, but spillovers to the broader financial system have been limited so far, the IMF said.

The body was referring to the collapse of blockchain Terra with its algorithmic stablecoin comment. Terra was popular among crypto traders until May when its algorithmic stablecoin UST lost its peg to the dollarand trillions of dollars of investment disappeared. Many investors were burned and the contagion from the Terra fallout spread to other segments of the crypto market as a result.

Institution after institution, from the Bank of England to the Federal Reserve, has since gone on to blast the idea of ​​stablecoinsor at least say they need better regulation. The Federal Reserve Vice Chair Lael Brainard said earlier this month that Terras demise was reminiscent of classic runs throughout history and that new technologies wouldnt necessarily protect investors from the same risks.

Stay on top of crypto news, get daily updates in your inbox.

[ad_2]